How is Wealth Bonus different from a premium-back promise?
Well, premium backs tend to sound like a whole lot more than they often are
Wealth Bonus starts off good and just gets better... and better... and better...
Don’t get us wrong, we like the concept of a "premium back" promise as much as the next guy, but there are some parts of the promise we're not so keen on.
First off, the amount promised at a distant date is often quoted quite loudly 📣, yet we believe it is misleading. For example, "you will get R100,000 in 15 years time". While this is technically true, and we're not accusing premium backs of being underhanded 😏, the reality for the client is far less "major" than it seems on the surface.
Without getting too technical, what we're saying is that R100,000 in 15 years time is much less than it sounds. And this is because inflation over time means that R100,000 then, is worth much less than R100,000 now. In fact, if inflation runs at 6% per year, then R100,000 in fifteen years time will buy you more or less what R40,000 will buy you today.
So, while the premium backs sound great, they tend to not be as great as they sound.
The other thing that bugs 🐛 us about premium backs is that they are usually an optional extra. This means that people have to choose to have the premium back and then, when they do add it, it's normally in return for a pretty hefty increase in their premiums 🤢. In fact, there is a decent argument to be made that someone should rather just save that extra money and they would be better off - but that's a story for another day.
So, how is Wealth Bonus different?
Today's Wealth Bonus amount is today's money.
And if it's invested well, we expect that your Wealth Bonus will grow to keep up with, if not surpass, inflation 🏇🏽.
Wealth Bonus is not optional because we think that everyone should get Wealth Bonus, rather than the select few who can afford it. So Wealth Bonus is just the way Indie does things.
It's automatic, and available for all.
We don't want to restrict people to just "premium back". If someone is with Indie for long enough, and their Wealth Bonus is looked after, there's no reason why someone can't get MORE than their premiums back.
Imagine, if you will, a 30-year-old gets herself insured with Sanlam Indie at a monthly premium of R1 000 and is hooked up with a monthly Wealth Bonus contribution of R1,000 (because at this age we fully match your premium value).
If we assume her cover grows over time, we’d also expect her premium to increase by an average of 10% each year. In year two, her premium would be R1,100, in year three it’d be R1,210, and so on. You get the drift. When she turns 70, she’ll have paid a total of R5.8 mil in premiums, which might sound like a lot of cash, but she got covered for 40 years and, if she’d claimed, she would’ve received a BIG FAT payout!
The big plus that Wealth Bonus offers is that you get paid even if you don’t claim. In this case, when she turns 70, her Wealth Bonus will be R7.6 million (if we assume that her investment grew at 7.5% each year and that she kept her CashDrops invested), which she'll get as cash to do whatever she wants with.
Finally, Sanlam Indie is all about financial wellness. We want you to be financially free, and we’ll help you in any way we can. While we only have life insurance available, we think Wealth Bonus is a great way for you to start investing. After all, insurance shouldn't make you wealthy - but investing can. We hope Wealth Bonus will give you the confidence to think about saving and investing, and then you'll feel comfortable to do that in a big way one day.